The Business of Business Software
When most people think about software for business, they tend to think of things like Microsoft Office. After all, Office is the application suite that many of us spend a great deal of time in during our work days.
In reality, however, productivity suites like Office only represent a small portion of the overall market for software used in businesses and other large enterprises. Some of the biggest categories are things like Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and Business Intelligence (BI) and analytics. In addition, there are millions of custom applications (many of which are built with these types of tools as a foundation) that play an extremely important role in the operation of today’s businesses.
While Microsoft is an important player in many of these categories, it’s companies like IBM, SAP, Oracle, and Salesforce that are the leaders in many of these lesser-known segments that are commonly referred to as “back office” operations (a historical phrase that stems from many business organizations having the operational teams doing this work physically located in the rear section of office buildings). In fact, companies like SAP have built large businesses creating the tools and platforms that sit at the central operational point for many organizations in areas ranging from supply-chain management to human resources and other personnel systems.
At last week’s SAPPHIRE NOW, SAP’s annual customer conference, the company announced a major entry into the “front office” CRM market with C/4 HANA. The new offering ties together the technology from a number of different acquisitions it has made to create a suite of applications and cloud services that allows sales and marketing people (who typically sat in the “front” part of office buildings) to organize all the critical information about their customers in a single place. C/4 HANA builds on the company’s existing in-memory HANA database architecture, which stores all data and applications in server memory (versus in storage) to speed overall performance.
What’s interesting about the release is the position it holds in the overall evolution of the enterprise software market. For several decades, companies like SAP were strongly associated with old legacy software that ran only in the physical servers within a company’s data center—or “on premise,” as many like to say. The applications were large, monolithic chunks of code that were so complicated, they almost always required external help from large consulting firms and system integrators, or SIs (such as Accenture, CapGemini, the services division of IBM, etc.), to properly install and deploy.
Over the last decade or so, however, we’ve seen companies like SAP and IBM evolve their software architectures and approaches, in large part because of the dramatic rise of cloud-based software companies such as Salesforce.com. The efficiencies, flexibility, and cost-savings enabled by these internet-based business software companies and the new business models they offered—such as Software as a Service (SaaS), Platform as a Service (PaaS), etc.—forced some dramatic changes from the traditional enterprise software vendors. In particular, we saw a dramatic increase in the use of public cloud platforms, such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud, to host and run applications that traditionally only ran in corporate data centers. In addition, we’ve witnessed the dramatic increase of enterprise mobile applications that provide a means to run or interact with business software on our smartphones and other mobile devices.
The new C/4 HANA release is an intriguing example of these many developments because it is a cloud-first set of tools that companies can now run in the public cloud across any of these major cloud platforms, in their own private cloud within their data center, or in a combined “hybrid” cloud model. Architecturally, the suite incorporates a large number of microservices—a dramatically different and more modular structure than older monolithic applications—that offers much more flexibility in terms of how the software can be leveraged, updated, and enhanced. In particular, the ability to do things like plug-in new enhancements such as AI and machine learning via SAP’s Leonardo suite of new technologies is indicative of the new approach the company is taking with its software offerings.
At this year’s SAPPHIRE NOW, SAP also announced an SDK (software development kit) that will allow native access to all their services from Google’s Android platform for mobile access. This builds on the work that the company had previously done for iOS and Apple devices.
Even with all these enhancements and long-term evolutionary progress, there’s still no question that the bulk of enterprise software offerings can still be extremely complex and difficult to completely decipher. However, it is also clear that tremendous progress is being made and that, in turn, is helping companies who use these tools improve their efficiencies and enhance the digital readiness of their organizations. As the business environment continues to advance, it’s good to see the toolmakers who’ve supported these companies taking the steps necessary to make these digital transformations possible.